Softening market driving traction for MGA incubation platform: Maleary

By Rebecca Delaney

Feb 25 - (The Insurer) - The softening market cycle in certain lines of business has led to greater traction in the MGA segment, with Pro MGA Global Solutions looking to bolster its geographic footprint in response to growing demand, according to CEO Danny Maleary.

Maleary outlined elevated interest in the space from both inward distribution and risk capital in an interview with The Insurer on the sidelines of a recent event in London.

“It feels, interestingly, that in a softer market we're getting more traction – not saying we weren't getting traction in a harder market, but I think we're finding a little bit more selection process in the harder market versus the softer market,” he said.

“But the softer market selection process isn't weakening the proposition. People are not just jumping in, they're looking at it with a measured view to when the next hard cycle is and wanting a relationship to be sustainable through both cycles.”

This interest is coupled with increasing sophistication, sometimes with individuals looking to have more than one MGA under their stewardship.

“We’re seeing a different breed of MGA, more sophisticated individuals creating a model that's attractive for underwriters to fit into, that delivers value and profit to their key stakeholders, and ultimately delivers what the client's looking for from a risk perspective,” Maleary continued.

He also pointed to Casper Specialty as an example of a model that may gain traction in the future.

Casualty-focused MGA Casper Specialty was launched in 2023 by former Argenta deputy active underwriter and head of casualty insurance Bradley Knight, with capacity provided by Argenta and investment from Miller.

“It was extremely amicable, but an interesting strategy embraced by Argenta to embrace that type of model. I think we’ll see more of those,” said Maleary.

“We’re seeing individuals that perhaps have had lots of years in particular brands and corporates that are now wanting to create something slightly different, and then bring in a good, diverse group of individuals that can take that to another level. We're seeing quite a lot of that.”

Inward distribution channels are generally seeking alternative ways of sourcing capacity via an MGA, with enhanced underwriting concepts increasingly in focus, whether pure algorithmic underwriting, smart follow, or a combination.

“2025 is going to be an interesting dynamic for the enhanced underwriting proposition as to how that evolves,” said Maleary.

“Whether it follows a pure algorithmic play, if there is smart follow with technology as an enabler, or a blend of both open market and portfolio approach, I think you're probably going to get a bit of everything, if I'm honest.”

GEOGRAPHIC FOCUS

Pro MGA Global Solutions currently has a pipeline of more than 50 opportunities, which must undertake a qualification process with both placement brokers and risk capital itself to determine risk appetite and reverse-engineer MGA strategies.

Europe is a particular area of focus for the incubation platform, accounting for around 25 startups over the past two or three years, Maleary said.

“There's a continuous desire to access the EU and the local distribution within the EU. We've done quite a few boot camps with certain brands to talk to local brokers, to educate and mentor them around what an MGA is and how it can benefit the ultimate client,” he added.

Pro MGA Global’s European platform is domiciled in Germany. Maleary said the firm is eyeing bases in Southern and Eastern Europe in the future, with Spain and Poland, respectively, as likely jurisdictions.

Outside Europe, Latin America is top of the geographical “wishlist”, namely Brazil and potentially Mexico.

Maleary said the firm has engaged in dialogue with the Monetary Authority of Singapore and the Dubai Financial Services Authority to discuss a regulatory vision for utilising an MGA regime to service the local territories while also providing access routes across Asia, Africa and the Middle East.

“The idea is a network of locally based quality individuals that understand the regulatory framework and have good relationships with distribution,” Maleary concluded.

“We've had lots of conversations with those entities, I know they've looked very closely at what the FCA are doing and has done, and their frameworks on trading. The FCA views us as a professional regulatory host, so the DFSA is considering whether they should embrace those types of businesses to help them attract MGAs for the territory.”